New Colorado health insurance regions could bring down costs

Under the health care law, insurance companies can take into account only 5 things when setting premium costs.

1. Age: Older people can be charged up to 3 times more for premiums than younger people.

2. Geographic location: Where you live has a big effect on your premiums. Competition, local regulation, and cost of living in different areas account for this.

3. Tobacco Use: Insurers can charge tobacco users up to 50 percent more than those who don’t use tobacco (In Colorado, carriers can charge up to 15 percent more).

4. Individual vs. family enrollment: Insurers can charge more for a plan that covers a spouse and/or dependents.

5. Plan category: Plans are available in five categories: Bronze, Silver, Gold, Platinum, and catastrophic. The categories reflect how you and the plan share costs. Bronze plans will likely have lower premiums and higher out-of-pocket costs. Platinum plans are likely to have the highest premiums and lowest out-of-pocket costs.

EAGLE COUNTY — The federal government’s approval of new health insurance coverage regions in Colorado isn’t enough to quiet down the conversation about high health care costs in the mountains.

Last week, the U.S. Department of Health & Human Services approved a Colorado Division of Insurance request to shrink the 11 current geographic rating regions down to nine regions in 2015. The approval comes after months of controversy in Eagle, Garfield, Pitkin and Summit counties — the four counties that make up the current resort region that, according to a Kaiser Family Foundation Study, boasts the highest health insurance premiums in the country.

Officials across the region have weighed in on the subject ever since residents discovered the disproportionate premium rates as compared to other rural regions in the state and to the Front Range. Garfield County commissioners at one point even threatened to sue the state if its residents and small businesses couldn’t get some relief from the exorbitant premiums.

While the newly drawn regions should provide some savings for the region on 2015 health insurance premiums, it’s just one small piece of the very complex puzzle that is health care in the United States.

“I think it’s a win for Garfield County, no doubt about that,” said Garfield County Commissioner Tom Jankovsky, who has been one of the more vocal officials in the region on the subject.

He’s hopeful the rates will come down next year as a result of the new regions, however he’s expecting to see some changes to rates across the board as part of the natural process of adjusting to the Affordable Care Act.

In Garfield County, for example, there are 2,000 more people on Medicaid today than there were a year ago. Those kinds of things factor in to overall health care costs. Hospitals that see more Medicare and Medicaid patients absorb costs because those federal assistance programs often fail to cover 100 percent of the billed costs.

And because insurance premiums are a reflection of the cost of health care, redrawing a few geographic boundaries is only buying time before a real solution can be found, said Ben Price, executive director of the Colorado Association of Health Plans.

“What people really can’t afford in that area is health care,” Price said. “You can move around the regions and you’re essentially asking other parts of the state to subsidize the premiums, but that really just masks the overall problem.”

‘Right solution for now’

The Colorado Division of Insurance set the current rates last year based on 2011 health care claims data, said Commissioner Marguerite Salazar. The division didn’t have new enough data to make a different analysis, she said.

The feedback from the resort region counties flooded her office, with residents, county commissioners, state and federal legislators all weighing in.

“I felt like I needed to respond and do this and try to lower those excessively higher premiums we saw in the rural resort region,” Salazar said. “I do feel like it’s the right solution for now.”

She said the division can only address the insurance side, but without work to bring down costs on the provider side, “everything we’ve done is going to be for not.”

Under the Affordable Care Act, insurance premiums are based on four factors: geography, age, the type of insurance plan and whether or not the insured is a smoker. Insurance carriers in Colorado can charge up to 15 percent more for smokers, and up to three times more for older people vs. younger people.

WORKFORCE CONCERNS

But there’s no limit to the surcharges based on geography, said Eagle County Commissioner Kathy Chandler-Henry.

She said that while Obamacare has helped many Eagle County residents who were previously uninsured get insurance, it’s the middle class folks — those who make over 400 percent of the federal poverty level and can’t qualify for the Medicaid or Medicare assistance — taking the hit across the entire region.

“We’re really concerned about it from a personal and workforce level,” she said. “People aren’t going to be able to live and work here because they can’t afford health insurance. That’s a concern for us.”

The newly drawn regions will help spread the costs out over the Western Slope, excluding Mesa County which is in its own region, but Chandler-Henry knows it’s not enough.

“I’m hoping we can sit down with the providers and hospitals and work together,” she said. “I suspect there are some creative ways to work together regionally.”

Chandler-Henry and Jankovsky are trying to get appointments to a new state cost commission, which lawmakers approved this year, which is scheduled to begin meeting this summer. The commission will be tasked with looking at what drives costs in the state and what can be done about it.

Price said the Colorado Association of Health Plans is “putting a lot of hope in that.”

“Because something just has to happen — something just has to give,” he said. “It has finally reached a point where people say, ‘what gives.’”

Shop around

Salazar has enjoyed some praise this week since word of the approved new regions spread. She has also taken a fair amount of criticism from frustrated folks in the region.

Congressman Jared Polis sent comments to Salazar on Monday, calling the change in the geographic rating regions a “significant step.”

“I am hopeful that this change will bring down the staggering premiums that residents of Summit, Eagle, Garfield and Pitkin counties are currently being forced to pay and allow Coloradans who live in mountain communities to take advantage of the same affordable rates for health care that their neighbors in Grand and Lake counties already enjoy,” Polis wrote.

Summit County Commissioners released a similar statement Tuesday afternoon. The optimism heard across the region often had strong undertones of concern that the root of the problem — high health care costs in the region — isn’t being addressed.

“While I think it’s great that our local politicians lobbied for the regions to be changed, I just doubt that we’ll see a significant price drop,” commented Lauren Forcey on the Summit Daily’s Facebook page. “Everything else is expensive here (‘price of paradise’) so I would be very surprised to see rates close to what folks in Denver and the Front Range pay.”

That’s why people need to do their research when looking at health care options, said Pat Pier, a Carbondale insurance agent, financial adviser and president of the Western Region Association of Health Underwriters.

“Shop around for your health care,” she said.

If consumers get as savvy about buying health care as they are about finding a good retail deal, then officials throughout the resort region think it could force prices down.

A lack of competition in the mountains — from hospitals to doctors to insurance carriers — is just another reason among many that keep costs so high here.

Chandler-Henry is hopeful a new carrier might enter the market — Kaiser — which would drive competition in that arena down.

“The more insurance providers we can get, the better off we’ll be,” she said.

But that doesn’t mean those providers will have better negotiating power with hospitals and doctors over health care rates when no competition in those fields creates a somewhat monopolistic power.

“I think a lack of competition is a real factor,” Price said.

Salazar hopes all of the focus on costs might help the health care providers understand the severity of the dilemma, and perhaps they’ll be more willing to come to the table to negotiate lower prices in the near future, she said.

And all of the focus and controversy surrounding health care in recent months should also create savvy consumers, she said. People understand health insurance better than ever because of this frustration.

“People will be more responsible,” she said. “I would hope people start realizing that somebody pays. The attitude of ‘I’ve got insurance and it doesn’t matter (what it costs),’ we have to get away from that.”

Lauren Glendenning is the editorial projects manager for Colorado Mountain News Media. She can be reached at lglendenning@cmnm.org and 970-777-3125.

The graduates of Vail Mountain School’s class of 2019 will be off to far-flung destinations next fall, set to enter college in one of 16 different states or explore the world on a gap year. One grad is even attending college in Canada.